Components of Long Term Incapacity Benefit

1240/5(2530)

WRITTEN QUESTION TO THE PRESIDENT OF THE EMPLOYMENT AND SOCIAL SECURITY COMMITTEE BY DEPUTY G.P. SOUTHERN OF ST. HELIER

ANSWER TO BE TABLED ON TUESDAY 24th MAY 2005

Question

1. In hisanswertomyquestionon Long Term Incapacity Allowance(LTIA) on 15th March2005, the President indicated that over time, moving to a gender-neutral system of individual entitlement is cost neutral'. Would the President confirm, whencomparing figures for the new LTIA system with its predecessor,whetheritis valid to ignore the change from the marriedcomponent' in this benefit, or whether reduced numbersof these claims will be compensated by increased numbersof married women submitting claims?
2. Data given in response to myquestiononLTIAon 19th April 2005, revealed that a total of347 applicants were assessed for this benefit in the 4th quarter 2004and the 1st quarter 2005, ofwhich243,had they been receiving Invalidity Benefit, would represent a total weekly cost of£35,363 as compared to a £18,990 equivalent underLTIA.

 W  ould the President inform members whether this reduced benefit level provides valid grounds for the

Committee to review the comparisons between the former Invalidity Benefit and its replacement LTIA?

3. Would the President confirm –

( i) that these 243 recipients, if on of Invalidity Benefit (at present rate of £145.53) would have received in

total £35,363 per week (being some £459,700 per quarter or £1,840,000 per year);

( ii ) that these 243 recipients of LTIA (using the data on percentage awards given) will now receive £18,990

per week (being only 53 per cent of benefit due under the previous system); and

( ii i) that the annual saving to the Social Security Fund on payments to these recipients over a year will be

£865,000 when compared to the previous Invalidity Benefit system?

I f so, would the President inform members whether the Committee was aware of these savings when the

changes to the benefits system were being consulted on, and whether the States and the public were informed?

Answer

1. Cost neutral, gender neutrality and individual entitlement are notbased solely around LTIA or any one benefit but are an integral part of the whole system of contributions and benefits. The abolition ofthemarried woman'soptionnottopay contributions andotherchanges introduced as a result of the last major reformof the Social Security system were to abolish discrimination in the previous system and put men and womenon an equal footing.

N  o doubt the outcome will factor into the U.K. Government Actuary's reviews. One of the main aims was

also to improve pension entitlement for women and it will be some years before the full impact of the whole change is achieved.

2. As the Deputy isaware, a reviewof the changes to the incapacity benefit system will take place after a full year's implementation. (Mostchanges to benefit systems take some years to settle down into a pattern). I do not believe the Deputy 's reasons for review at this earlystage are valid because I cannot accept that his comparisons are valid.

3. I cannot confirm the Deputy 's figures because,as I stated in my previous replies, the Deputy makesthe erroneous assumption that existing and future LTIA recipients would all have been eligible for Invalidity Benefit. Earlyindicationsof the change are that the previous incapacity benefit system masked disguised retirement' and unemployment'. This alsoseems to beanissue in other jurisdictions. The Deputy isalso reminded that the system now operating has been partly inforcesince1974, at leastforpeople incapacitated through accidentwhichleads to a long term loss offaculty.These cases continue withoutanychangeother than the benefit has been renamed. Themainchangehasbeen that long term illness is now handled in the same wayasthose previously assessed as a result ofan accident.